Playstation Network users may no longer file class action lawsuits against Sony, under a new user agreement that players must agree to before signing into the network. Now, PS3 and PSP owners will have to sue individually or seek arbitration for issues like security breaches or the removal of advertised features.

And guess what? The policy change is probably legal thanks to the Supreme Court.

Back in April, the Supreme Court ruled that AT&T–and any company, for that matter–can use service contracts to block class action lawsuits and force customers into binding arbitration. Lower courts had argued that such clauses were “unconscionable” under state consumer protection laws, but the Supreme Court overturned those decisions in a 5-4 ruling. The Federal Arbitration Act was designed to promote arbitration over costly and lengthy lawsuits, the court’s majority argued, so allowing class action lawsuits to proceed would be at odds with what the federal law is trying to accomplish.

As Ars Technica’s Chris Foresman noted at the time, the ruling allows AT&T and other companies to “quietly settle a few individual claims instead of being faced with larger class-action settlements which might include punitive awards designed to discourage future bad practices.”

Generally these third parties are hired from companies that specialize in corporate arbitration and – most of the time – side with the company that used their services because they want the repeat business.

Granted, class action lawsuits aren’t so great either. They’re costly, they can take years to resolve, and they rarely result in big monetary awards for the plaintiffs. But they can also prompt changes in company policy, such as Skype eliminating expiration dates on calling credits or Verizon Wireless pro-rating early termination fees.

In Sony’s case, Playstation 3 users have sued to restore “Other OS” functionality to the system. That lawsuit that will continue because it began before the policy change, but if Sony ever wrongs Playstation Network users again, their options are now limited.

6 Comments For This Post

Next time a new console comes out, I hope tech writers will take pains to tell their readers about the possibility that the cool extra features that make the hardware worth the money can be taken away on a whim, and there is no possibility of getting restitution for the now-broken functionality (at least in the US). I remember that the PS3 seemed like the coolest of the current generation because you could install Linux, it had Blu-Ray, &c., but now it seems like everything except playing (local) games and watching movies is being taken away, and there's nothing you can do except unplug it and never update it, and never buy a new game that requires a newer version of the OS for no particular reason.

I don’t think it’s legal to change the contract after the customer has made the purchase. When I made my purchase the box plainly stated it does everything and Linux would run on it as well. I am a PSN+ subscriber. Yesterday I got the message I could not log into my paid account unless I agreed to another contract. This may be legal in Japan, but US Courts should know this is wrong.

What Sony did was move the companies that own the PS3 before the hack to a different holding company. This is done to prevent lawsuits &change the TOS to things they wouldn't be able to get away with essentially. You can't sue the new company for having your identity stolen & life ruined because they didn't own it at the time! Since they are a new company now, they have the right to change the TOS, you have to agree or they can ban you. This was ruled illegal by the lower courts, but the supreme court(bullshit) ruled it was legal. AT&T to get out of paying people for another lawsuit where they screwed people over. I for one will not buy ANY sony product ever again and will tell all of my friends about this. I'm sorry but when you BUY an item you should be able to do anything you want to it.

I only see this as positive thing. Class action lawsuits A, just waste my tax payer money on trivial trials 99% of he time and B, participants get $50-$100 (or gift card for the company's service and get your money back) while rich lawyers get richer!